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Financial development and patterns of industrial specialization: Regional evidence from China

  • He , Qing

    ()

    (BOFIT)

  • Xue, Chang

    ()

    (BOFIT)

  • Zhu, Chenqi

    ()

    (BOFIT)

Registered author(s):

The paper investigates the influences of financial development on patterns of industrial specialization across China’s regions. We find that industrial sectors reliant on access to external finance are found to concentrate in regions with developed financial markets. Both foreign direct investment (FDI) and informal financing channels are shown to play significant roles in shaping patterns of industrial specialization in China. In contrast, proxies for formal financial markets, e.g. the banking system and capital markets have few effects on regional industrial agglomeration. The role of financial development remains robust to instrumental variable estimation and controlling for other traditional determinants of regional specialization.

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File URL: http://www.suomenpankki.fi/bofit_en/tutkimus/tutkimusjulkaisut/dp/Documents/2014/dp1214.pdf
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Paper provided by Bank of Finland, Institute for Economies in Transition in its series BOFIT Discussion Papers with number 12/2014.

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Length: 36 pages
Date of creation: 11 Apr 2014
Date of revision:
Handle: RePEc:hhs:bofitp:2014_012
Contact details of provider: Postal: Bank of Finland, BOFIT, P.O. Box 160, FI-00101 Helsinki, Finland
Phone: + 358 10 831 2268
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Web page: http://www.suomenpankki.fi/bofit_en/
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  1. He , Qing & Xue, Chang & Zhu, Chenqi, 2014. "Financial development and patterns of industrial specialization: Regional evidence from China," BOFIT Discussion Papers 12/2014, Bank of Finland, Institute for Economies in Transition.
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  28. Bai, Chong-En & Du, Yingjuan & Tao, Zhigang & Tong, Sarah Y., 2004. "Local protectionism and regional specialization: evidence from China's industries," Journal of International Economics, Elsevier, vol. 63(2), pages 397-417, July.
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